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by Jordan Green

News and views from inside the media bubble

WINSTON-SALEM AND HERBALIFE:  AWKWARD DANCE PARTNERS

Mayor Allen Joines is celebrating Herbalife’s decision to locate a manufacturing facility and bring almost 500 jobs to Winston-Salem, but the California-based nutritional supplement company has weathered some storms since hedge fund manager Bill Ackman told investors and journalists that he believes the operation is a pyramid scheme.

It’s hard to fault local elected officials for talking up a new corporate citizen, even if the average salary the company cited for the city is only $40,194 — below average earnings across Forsyth County. After all, local governments have two expectations to fulfill with economic development: create new jobs to employ residents, who will spend at least some of their discretionary income on local goods and services, and generate tax revenue. Local officials are not responsible for protecting the company’s shareholders or consumers, and it’s arguable whether they should be expected to vet a company’s ethical practices.

That said, the taint on Herbalife has to dim some of the glow for a municipality that markets itself as a “city of arts and innovation.”

The latest news from Bloomberg is that Herbalife’s stock is rising again after a straight week of plunging numbers in the wake of Ackman’s presentation in mid-December. Ackman accused Herbalife of misrepresenting sales figures, misleading distributors about potential earnings and selling a commodity product at inflated prices, according to the Bloomberg article.

The company has responded by calling Ackman’s assertions a “malicious attack on our business model based largely on outdated, distorted and inaccurate information.”

If things don’t work out, Winston-Salem has the economic development equivelent of a prenup: clawback provisions.

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